Retirement Planning Simulation

Kerry Back

BUSI 721, Fall 2022
JGSB, Rice University

Example

R = 30*12      # 30 years until retirement
T = 60*12      # 60 total years
g = 0.002      # deposit is 0.2% larger each month
B0 = 100000    # initial balance is $100,000
D1 = 1000      # initial savings is $1,000 (per month)
W = 10000      # withdraw $10,000 per month in retirement

mn = 0.005     # mean monthly return
sd = 0.04      # std dev of monthly return
nsims = 1000   # number of simulated

Distribution of ending balances

mean    1.688432e+06
std     1.173601e+07
min    -2.593716e+07
10%    -5.569095e+06
25%    -3.566966e+06
50%    -1.293359e+06
75%     2.881742e+06
90%     1.235784e+07
max     2.022982e+08
dtype: float64